PulteGroup, the third-largest U.S. homebuilder, has reported robust interest from Americans in home purchases, leading to increased profits despite elevated interest rates.
In the quarter ending in September, net income reached $638.8 million, a 1.7% improvement from the prior year. Home sales revenue also saw a 3% rise, reaching $3.9 billion.
The company successfully increased closing prices by 2% year-over-year, with an average of $549,000.
In an earnings statement, President and Chief Executive Officer Ryan Marshall acknowledged the impact of Federal Reserve actions and broader market forces, which have driven interest rates to 20-year highs. However, he emphasized that the strong fundamental desire for homeownership persists, while the housing supply remains limited.
“PulteGroup’s ability to offer a variety of locations, price points, floor plans, and incentive packages allows us to meet consumer needs while helping to address the affordability challenges caused by today’s higher rates,” he said.
Pulte operates in 24 states, and 35% of its customers are first-time buyers, according to the company’s website.
As of the week ending Oct. 19, the average 30-year fixed mortgage rate stood at 7.63%, marking the sixth consecutive increase and the highest level since December 2000. In comparison, the rate was at 6.94% a year prior.
Higher mortgage rates have led to homebuyers delaying their purchases. Additionally, homeowners who secured lower rates have refrained from listing their properties, resulting in reduced inventory and upward pressure on prices.
The National Association of Realtors reported a 15% decline in sales of previously owned homes in September compared to the previous year, marking the lowest level since 2010. During the same period, the median price of an existing home rose by 2.8% to $394,300 from September 2022.
Mortgage rates are directly influenced by Federal Reserve policy, and the central bank maintained rates within the range of 5.25% to 5.50% on Sept. 20, the highest level in 22 years.
The next Federal Reserve rate decision is scheduled for Nov. 1.
